As a huge number of retailers press forward with negotiations to reduce their rents, a report at the weekend said that Primark has made some of its landlords sign gagging orders about the fact that it's continuing to pay its rent to them.
The Times said it’s paying rent to a “select group of landlords”, but has insisted on non-disclosure agreements (NDAs) due to the fact that it's refusing to pay rents to others.
In response, the retailer said NDAs are “standard practice” in areas where talks are commercially sensitive and “to infer otherwise in this scenario would be simply inaccurate”. It didn’t tell the newspaper how many landlords were being paid and how many weren’t.
It reportedly withheld £33 million worth of quarterly rent payments in March as it temporarily closed shops in 12 countries, 189 UK shops being shut at the time.
The newspaper said the retailer has been in talks with landlords and has agreed to rent payments with a number of them, but one claimed he had to sign a non-disclosure agreement in order to get paid.
But Primark is unlikely to be alone in its approach with the many retailers operating in the UK that has been demanding rent deals in recent periods likely to see their numbers increasing due to the pandemic.
More and more landlords are also being expected to offer rent deals related to turnover.
It marks a complete turnaround from several years ago when rent changes in the UK were largely upwards-only as property values boomed. But with the shift to online shopping and the downturn linked to Brexit even before the pandemic hit, the idea that shop rents should only ever go up has been abandoned, especially given that physical store turnover for most retailers has been constantly going down.
The British Property Federation (BPF) has estimated that with quarterly rents due on June 24, only 15% of the £32.5 billion due will be collected. That’s a smaller percentage than was collected in late March due to many businesses having had no revenue for months.